President Biden on Monday stressed that Silicon Valley Bank (SVB) will not get a government bailout after regulators seized the assets of the failed bank.
“No losses will be — and this is an important for point — no losses will be borne by the taxpayers. Let me repeat that, no losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund,” Biden said in remarks at the White House on the banking system.
Treasury Secretary Janet Yellen on Sunday ruled out the possibility of a bailout for the bank’s owners and investors, saying in the aftermath of the 2008 banking crisis that “we’re not going to do that again.”
The government gave financial support to rescue companies through bailouts in 2008 and Biden stressed that the loses from SVB’s failure will not be accepted by taxpayers. The Deposit Insurance Fund covers all deposits above the Federal Deposit Insurance Corporation’s (FDIC) limits for banks.
Lawmakers have also shown consensus around not allowing bailout options for SVB and members from both parties on Sunday said they would oppose a bailout. The U.S. government faced criticism after the 2008 banking bailouts, with many thinking the government rewarded executives and shareholders for irresponsible banking and investment practices.
The FDIC created the National Bank of Santa Clara to hold deposits and other assets of SVB on Friday.
Biden said that investors of SVB won’t be protectors and that the management of SVB will be fired.
“If the bank is taken over by FDIC, the people running the bank should not work there anymore,” he said.
SVB’s collapse was the largest bank failure since the 2008 financial crisis. Yellen said on Sunday it is up to federal regulators on how to proceed with SVB, although some lawmakers have called for a potential purchase of the bank from an outside entity.